The Secret To the Market

“You know you drive me up the wall 
The way you make good on all the nasty tricks you pull.” Crazy, Aerosmith

“Never argue with a fool, onlookers will have trouble telling you apart.” Mark Twain

“Any fool can believe the truth, it takes a genius to believe a palpable lie.” Anon

It’s necessary to hear how the market talks if you want to speculate successfully.
To do so you need to understand the language of the market.

There are many methods which seek to pull back the kimono on the market’s hidden secrets.
From my perspective one of the best methods for determining trend and anticipating what’s next
Is my Swing Method.

This is the Plus One/Minus Two pattern for buys or the Minus One/Plus Two pattern for sells.

It works on the hourlies, the dailies, the weeklies and the monthlies.

Let’s look at the dailies. The “Plus One” occurs when you get 3 consecutive daily highs.
3 higher consecutive CLOSES is not required, just 3 consecutive higher daily highs.

The Minus Two occurs when you get 2 consecutive lower daily lows anytime the 3 Day Chart is pointing up.

More than any other strategy, my Plus One/Minus Two (and Minus One/Plus Two) is a key factor underlying the effectiveness of my Hit and Run setups.
Why? Because it is conceptually correct and it does a great job of determining the trend.
In that way, it identifies powerful opportunities.

In sum, markets play out in three’s.
You’ve all heard that the 20 day moving average is referred to as the Holy Grail.
Well the 20 day moving average ties to 3 WEEKS.
The 20 hour moving average refers to 3 trading days
The 20 week moving average ties to 7 months.
As The Seer, W.D. Gann stated, “Seven is the number of Time. Seven is the number of panic.”
The market had a panic attack in early August 2024. We are 7 months from that time.
My thesis since October is that March would prove to be more than a one-off panic like August.

Let’s take a look at the anatomy of a winner Hit and Run members had with the help of the 3 Day Chart.

On Tuesday morning on the Hit and Run Private X/Twitter Feed, we called an audible to take GRAL long on a swing.
We were filled at 36.70.

GRAL turned its 3 Day Chart down on Tuesday morning in the region of the prior breakout pivot
on February 12.

GRAL went a little lower on Wednesday morning as the broad market slid.
However, it began to buck the tape. It actually turned green.
It was trading like a Torpedo—damn the torpedo’s, full speed ahead.

As well, GRAL was in the WEEKLY +1/Minus Two buy position.

We scaled out of the last pieced of GRAL at 43.50.

Let’s look at QQQ and the 3 Month Chart in the bull run from the November 2021 peak.

The 3 Month Chart turned down in February 2022… immediately off the high.
If the market had still been bullish, the turn down of the 3 Month Chart would have defined a low soon in terms of Time and Price.
Instead the Q’s continued lower.
The Sign of the Bear.

The 3 Month Chart turned up immediately following the October 2022 low.
It turned up in January 2023.
It stayed up.
In fact the Q’s ‘tailed off’ in February 2023 leaving a monthly signal reversal bar but, importantly, there was no downside follow thru.
Instead, the Q’s carved out a bullish outside up month in March 2023.
That bar telegraphed continuation higher.
The market was talking.
It’s language, it’s price action, was conspicuously bullish.
In turn, QQQ exploded into July.

Following a top in July 2023, QQQ pulled back tracing out 3 consecutive lower monthly lows producing a turn down in the 3 Month Chart.

THE MARKET EXPLODED.

The leading QQQ was not just talking. It was swearing.
The Q’s turned their 3 Month Chart back up as soon as possible, in January 2024,…3 months after the October 2023 low.

Look what followed.

The Q’s pulled back to kiss the bottom of a trend channel from the October 2023 low only once, underscoring the uptrend, —that is until now.
The bottom of this important trend channel was tested this month in league with a turndown in the 3 Month Chart.

Are the Q’s talking bullishly?
I don’t think so.
First and foremost, the current 3 Month Chart turndown is a different complexion that October 2023.

1) the current turndown follows a powerful advance, a 1 year blow off.
2) QQQ left an outside down month in February and is following thru to the downside.
3) the last turn down of the 3 Month Chart in October 2023 had the benefit of a bullish pattern…a Cup and Handle. In fact October 2023 defined the bottom of the Handle of the Cup and Handle.
The Q’s were talking if you have the dog ears to understand it.

Last fall I showed a the following trend channel forecasting top in January and the Last of the Mag-hicans.
The Mag 7 generals have led the sell-off. The troops are following suit.

I created a trend channel from the November 2008 low (that was the low in QQQ while the SPX went on to make a new low today, March 6th, 4 squared years ago).

Notice that November 2021 is the first time the top of the trend channel is struck.
Importantly it produced an Overbalance in time and price.
In other words the decline from the 2021 peak was greater in time and price than any other decline since the 2008/2008 double bottom.

The implication is that the rally off the October 2023 low is a last ditch rally—a blowoff that culminates a long advance.

Underscoring the culmination of the blow-off is the Square of 9 Wheel.

The low in October 2022 is 254 QQQ.
The high monthly close 522 in January is 180 degrees opposition 254
522 squares-out February 19th, the all time high in 2025.

Interestingly the pattern and days mirror that of January/February 2020.
The market struck a high on January 24th, pulled back, and then rallied to a new high on February 19th.
Then it crashed.
From a gap down on March 6th.

Is this cycle about to repeat?

This analogue is so precise it’s crazy to think it will repeat. Right?

However, the market is talking…even if he’s talking like a nut-job, he’s the boss.

What is the key to understanding the market?

Let me tell you what a Wizard thinks.

Walking down the beach one day shortly after completing the house I was building in Malibu, I was introduced to a trading legend.
Not one to mince words, after a few minutes of small talk, I blurted out, “What do you think is the secret to your trading success. If someone put a gun to your head, what would you say is the single most important thing to understand about the market?

His answer:

“One day a few years ago I was walking down this very same stretch of beach when I stubbed my toe on something under the sand. Kneeling down to uncover the object, as I brushed away the sand, a genie appeared. Yeah, a genie popped out of a magic lantern.

The genie said, “You have one wish, your wish is my command.”
I thought for a moment. Well, I have more money than I could ever spend, a great family.
There is one thing I responded, “I love Hawaii, but I’m afraid of flying. Could you build a bridge from Malibu to Hawaii?”

The genie threw up his hands, “Do you have any idea of the kind of engineering it would take for a project of that magnitude? Isn’t there anything else, anything at all?”

“Well, I replied, I make money in the market but I don’t understand it.
Can you explain to me how the market works?”

“Two lanes or four,” said the genie.

The mind of the market has as many turns and mysteries as the human mind.

Legendary trader, Jesse Livermore, was brutal in self-analysis. He told his sons his conclusions: “Successful trading is always an emotional battle for the speculator, not an intelligent battle.” He knew that his greatest enemy was his own emotions.

“The market is designed to fool most of the people most of the time. My satisfaction always came from beating the market, solving the puzzle. The money was the reward, but it was not the main reason I loved the market. The stock market is the greatest, most complex puzzle ever invented—and it pays the biggest jackpot. It was never the money that drove me it was the game, solving the puzzle, beating the market that had confused and confounded the greatest minds in history. For me, that passion, the juice, the exhilaration was in beating the game, a game that was a living dynamic riddle, a conundrum to everyone who speculated on Wall Street.” Jesse Livermore